Canadians are buying less food. Now what?
“The release of data by Statistics Canada last week has provided valuable insights into the dynamic nature of food retailing in Canada. Contrary to initial assumptions, the data reveals intriguing fluctuations in Canadian food and beverage retail sales per capita since 2017, challenging prevailing expectations and necessitating a closer examination of the underlying factors at play.
The figures indicate that in March 2017, sales per capita stood at $258.41, experiencing a marginal decline to $257.05 in March 2018 and a further decrease to $256.61 in March 2019. However, a notable shift occurred in March 2020, with sales per capita surging to $309.19. This significant increase can be attributed to the emergence of the COVID-19 pandemic and associated lockdown measures, which led to changes in consumer behaviour and a reversal of the preceding downward trend in food retail sales.
Post-2020, the data shows a resumption of the downward trajectory in food retail sales. In March 2021, sales per capita dropped to $277.03, indicating a decline from the previous year. This decline can be attributed to the lingering impact of the pandemic, which disrupted various industries, including the retail sector. Furthermore, in March 2022, sales per capita experienced a further decrease to $257.55, signifying a continuation of the downward trend. The most recent available data from March 2023 reveals a further decline to $237.20, marking the lowest point in recent history. These figures suggest that Canadians are spending less on food at grocery stores, despite facing higher food prices.
But here is another piece of valuable data. Recent NIQ data indicates a 2% decline in food sales by volume in Canada in the last year, further emphasizing the reduction in food expenditures among Canadians. This trend raises several considerations. One possibility is that Canadians are increasingly relying on alternative food sources, such as ordering meals from restaurants or utilizing unconventional channels to fulfill their food needs. However, given recent menu prices, this explanation seems unlikely. Another possibility is that individuals are opting for lower-cost alternatives and seeking out independent stores that cater specifically to the needs and preferences of immigrant communities. Private labels or store brands are and will increasingly become more popular. This observation suggests a potential increase in the number of food businesses serving these communities compared to previous periods, indicating a shift away from mainstream food sources.
Furthermore, the data suggests that Canadians may be wasting less food, particularly with the rise in remote work arrangements. The consumption of leftovers and repurposing of food could contribute to reduced food waste, although this is purely speculative. The occurrence of “shrinkflation”, whereby product sizes are reduced without a corresponding decrease in prices, may also play a role in reducing waste. However, the impact of these factors on the overall decline in food retail sales requires further investigation.
Another concerning possibility raised by the data is that Canadians may be consuming less food or relying on food banks more frequently. Reports of long lines at food banks and increased usage across the country indicate a potential rise in food insecurity. While it is unlikely that increased gardening activities alone could explain such a significant shift in the data, the underlying reasons for the increased reliance on food banks is troubling nonetheless.
Bottom line: If people think grocers are riding the inflation wave with their food sales, they should think again. It’s just not happening. Loblaw, for example, saw its food sales go up 3.1% in Q1, which is significantly below our food inflation rate. Grocers are treading water with food sales, at best. Record profits are being recorded, but it’s not because of food sales.
Canadians are buying less food and, chances are, that trend is likely to continue for a while. Just like in the early ‘80s, consumers are seeking out savings. This is what the market is doing to all of us right now. We are all becoming better bargain hunters – well, those of us lucky enough to afford the food we need to eat.”
*This article is excerpted from Canadiangrocer.com website, published 24th May 2023
